Key Takeaways
- Coffee prices are mixed, with arabica showing strength and robusta facing pressure.
- Supply concerns, including potential US tariffs on Colombian coffee and a strong Brazilian real, are supporting arabica prices.
- Forecasts for rain in Vietnam are weighing on robusta coffee prices, while shrinking ICE inventories provide underlying support for both types.
- Shifts in weather patterns, particularly La Niña possibilities, and production estimates from major producers like Brazil and Vietnam are key market influences.
Market Overview and Influencing Factors
December arabica coffee futures are currently trading higher, while November ICE robusta coffee futures are experiencing a downturn. This divergence reflects a mixed market sentiment driven by a variety of global supply and demand factors.
Arabica Coffee: Supply Concerns and Currency Strength
Arabica coffee prices are being bolstered by supply-side worries. Anticipation of potential new tariffs from the US on imports from Colombia, the world’s second-largest arabica producer, is a significant contributing factor. Additionally, the strengthening Brazilian real is providing support. As the real climbs against the dollar, it makes Brazilian coffee exports less attractive, further tightening global supplies.
Robusta Coffee: Weather Forecasts and Yield Expectations
Conversely, robusta coffee is facing downward pressure, largely due to favorable weather forecasts in Vietnam’s Central Highlands, a primary coffee-growing region. Expected rainfall is seen as beneficial for crop development and yields, potentially leading to increased supply.
Inventory Levels and Trade Dynamics
Shrinking ICE coffee inventories are providing a baseline support for coffee prices overall. Notably, arabica inventories have fallen to a 19-month low, and robusta inventories are also at a three-month low. Trade dynamics, such as the impact of tariffs on US imports from Brazil, are contributing to these inventory drawdowns and creating tighter supplies in the US market, as Brazil is a significant source of unroasted coffee for the country.
Geopolitical and Trade Policy Impacts
Hopes for the eventual removal of tariffs on Brazilian goods are acting as a bearish signal for coffee prices. Recent diplomatic talks between US and Brazilian officials have been described as positive, with plans for a meeting between the respective presidents, suggesting a potential easing of trade tensions.
Brazilian Weather and Crop Prospects
The easing of dry conditions in Brazil’s key arabica-growing region, Minas Gerais, is providing a bearish outlook for coffee prices. Recent rainfall has been significantly above the historical average, which is favorable for crop development. However, the potential for a La Niña weather system in the southern hemisphere has been raised by the National Oceanic and Atmospheric Administration (NOAA). Such a system could bring dry weather to Brazil, potentially harming the 2026/27 coffee crop, a significant concern given Brazil’s role as the world’s largest arabica producer.
Vietnam’s Export Performance and Global Supply
Robusta coffee is also experiencing pressure from increased export volumes from Vietnam. The country’s coffee exports for the first nine months of 2025 have shown a notable year-on-year increase. This surge in exports, coupled with reports from the International Coffee Organization indicating an overall rise in global coffee exports for the current marketing year, suggests adequate global supplies, which is typically bearish for prices.
Production Estimates and Analyst Projections
Brazil’s crop forecasting agency, Conab, has revised its 2025 arabica coffee crop estimate downwards, also slightly reducing its total coffee production estimate. These revisions suggest potential challenges in Brazilian output. However, Vietnam’s robusta coffee production for 2025/26 is projected to increase significantly, potentially reaching a four-year high. Projections from the USDA’s Foreign Agriculture Service indicate a record world coffee production for 2025/26, driven by a substantial increase in robusta output, though with a decrease in arabica production. Despite these overall supply increase projections, some analysts, like Volcafe, are forecasting a global arabica coffee deficit for the upcoming seasons, highlighting the complex and often conflicting outlooks in the market.
Expert Summary
Coffee markets are experiencing mixed signals, with support for arabica stemming from supply concerns and currency movements, while robusta faces pressure from favorable weather forecasts in key growing regions. Global inventory levels and potential shifts in trade policies remain critical factors influencing price direction.